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FMCG brands, if you didn’t have an Amazon strategy before, you need one now

Amazon’s culture lends itself to innovation, but its rapid development and deployment of the Amazon Echo is in a league of its own.

Opening with the original Amazon Echo in June 2015, the Seattle-based company released the Echo Dot in September 2016, the Echo Look just two weeks ago, and this week the newest member of the family; the Echo Show.

The new Echo Show device, which will be available in the US in late June, is driven by it’s trademark Alexa voice OS, but also has a screen and built-in camera, making it perfect for video-calling, watching videos and more.

Each Echo has a slightly different use case, thus increasing the rationale to have multiple Alexa-driven devices in the home.

Naturally, if Amazon’s mission and ambition come to pass, our homes will be full of Echos, as well as third party software and services that are uniquely enabled by Alexa, thus creating a lock-in that will be hard for people to shift.

The staggered deployment of the Echo product family is as swift as it is impressive; and it’s worth wondering – why the rush?

An easy answer is because the technology giant faces pending competition from at least two other tech giants; Google & Apple.

They are all clamouring into this space because Amazon is creating the next great operating system; the OS for the home, the place where the smartphone is least likely to be in your hands.

There are several jobs that need to be done in the home that a voice assistant can help with, as the promo video above demonstrates. From communication, to providing information and entertainment, the Echo suite of devices enables consumers to think out loud and get things done simultaneously, in an increasing number of ways that Amazon’s competition had been hoping to do with their own voice platforms.

The implications and stakeholders of Amazon’s potential stranglehold on the home are vast and varied; content consumption and entertainment, life and home management, security, communication and of course, commerce.

Given Amazon’s history, investment & dominance in the commerce space, it is interesting to consider some of the high-level implications of having Alexa as the operating system of the home

Amazon = the destination store of choice – by default

If there is anything that Amazon pushes with the Echo, it is convenience. It has taken advantage of / manufactured this convenience to make it even easier for consumers to purchase products from Amazon.

As “The Everything Store” pushes yet another lever in the flywheel to become the store of choice by default, it increases the pressure on brands that do not have their products listed on the platform.

Who knows how many purchasing opportunities will be missed by not placing products on Amazon, especially consumer packaged goods, that will no doubt be heavily impacted if they are not capable of answering the call for more diapers or toilet roll in a consumer’s hour of need.

The changing shape of the regular shopping trip

If shopping with Alexa takes hold, by extension the shape of a consumer’s shopping trips will also change. It makes sense to assume that the weekly shop will look different, because more products will be ordered and delivered on demand.

The logic for this thinking increases further when you consider initiatives like Amazon’s Subscribe & Save programme.

It is not a hard leap to imagine Alexa recommending certain products for the subscription programme, after you have told it when you need it in regular intervals, thus removing repeat purchases from normal purchase consideration.

Perhaps consumers will go on more frequent, but much smaller shopping trips, so they can buy the fresh produce or urgent needs they have that day. Or maybe, such trips will be oriented around big occasional buys that warrant trying in-store before purchase.

Either way, such change means opportunities and threats are not far behind.

Voice + delivery = the highest convenience

Any retail professional with their ear to the ground would have heard reports of Amazon’s plans to own logistics, from the planes it has hired, to the drones it is testing, to delivery tracks and drones that will predict when you will order certain products, so that delivery can be near instant.

As Amazon makes it easier and quicker to buy products and receive products once ordered, retailers and direct-to-consumer brands will have to compete with consumer expectations that are driven by Amazon’s ridiculously efficient experience.

With every innovation, Amazon seeks to make the consumers’ life easier and builds a moat around its offering and ecosystem.

In summary

The competitive battleground looks like it’s shifting slightly from the store to the home – and Amazon looks ever more likely to becoming the gatekeeper.

To be clear, Alexa produces opportunities as well as threats. Organisations that figure out how to reposition their marketing, product and packaging initiatives for a world where consumers expect to order products with their voice and have it delivered to them within 24 hours, will be better positioned than brands that are only competing for recognition on shelves and over supermarket end caps.

Whether you are a retailer or a consumer goods brand, if you didn’t have an Amazon strategy before, you need one now.

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